EA says $16 million in operating expenses are due to restructuring costs

Things haven't been going all that well over at Electronic Arts. Despite being one of the biggest companies in the gaming industry, EA has been struggling with profitability. The profitability struggles led the company to shed employees over the last several months.

During its investor call this week, EA confirmed that it let about 900 workers go during its organizational restructuring process. EA also confirmed that the layoffs cost company about $16 million in the short term.

EA's Blake Jorgensen noted during the call that EA had $540 million in operating expenses for the current fiscal quarter. That figure is $15 million higher than the company had expected due to those costs associated with operational expense reducing actions, including layoffs. Some of the extra expense also came from the resignation of EA's CEO John Riccitiello back in March.

Jorgensen also noted that EA's plan for cost reductions would "reduce our overall headcount by approximately 10%." EA previously laid off the entire staff in its Montréal game studio.

EA was also gifted with the worst company award for the second year in a row last month. That award was bestowed on EA from The Consumerist.

Much of the blame for EA winning the dubious distinction of the worst company for the second year in a row was blamed on the online server disaster that happened with the company's popular game SimCity. Gaming servers that were overloaded prevented many people who purchase that game from being able to play, sometimes for days.

EA caters to a different market than most video game companies. You see, most companies sell games that people want to play because doing so is enjoyable. EA targets the market of 'games that have a famous enough license that people will buy them no matter how terrible they are'.

The less money they spend on writers, artists, and programmers, the more money they can spend buying licenses. It's like watching movies based on video games - it's more profitable to produce them cheaply because making them good won't significantly increase the audience size.